The City watchdog has said it is investigating whether hedge fund manager Crispin Odey is a “fit and proper person” to work in financial services as it revealed the scope of its probe.
In a letter to the Treasury Committee, Financial Conduct Authority (FCA) chief executive Nikhil Rathi confirmed an ongoing investigation into Mr Odey and Odey Asset Management (OAM), which began in 2021.
He said the FCA probe into Mr Odey is focused on “allegations that he dismissed OAM’s executive committee for an improper purpose” and whether he is a “fit and proper person” to work in financial services.
He added that the regulator is also looking at whether Mr Odey “failed to comply with the FCA’s conduct rules relating to integrity and acting with due skill, care and diligence”.
Mr Odey fired the hedge fund’s executive committee in 2021.
The Financial Times last month published a series of allegations of sexual harassment or misconduct by Mr Odey, which he denies.
The newspaper – together with Tortoise Media – said it had spoken to 13 women who claimed they were abused or harassed by the 64-year-old fund manager.
He was ousted from the firm in June after the allegations and the hedge fund has since been battling to contain the fallout from the crisis.
Mr Rathi told the Treasury Committee the FCA’s oversight of OAM had been “intensive” since 2020 and that it opened its investigation in the middle of 2021.
He confirmed the FCA has been in contact with the police, as some of the allegations are “potentially criminal in nature”.
The regulator is also investigating OAM for “possible contraventions of the FCA’s Principles for Business for failing to conduct its affairs with due skill, care and diligence, and failing to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk
management systems and controls”.
Mr Rathi said Mr Odey threatened a judicial review over the FCA’s investigation, which it “responded robustly to”, but that court proceedings did not start and it continued with its probe.
The FCA revealed that it receives around three whistleblowing allegations relating to sexual misconduct each calendar quarter.
This is out of about 1,000 whistleblowing disclosures annually.
The Treasury Committee is set to quiz the FCA on July 19 over how it has handled allegations of sexual misconduct against Mr Odey and what action it has taken.
OAM has been fighting for survival since the allegations against Mr Odey were published last month.
The group – which had around 4.4 billion US dollars (£5.3 billion) in assets under management before the crisis erupted – has already seen customers rushing to remove their money from the funds it manages and a raft of banking groups move to cut ties with the firm.
It revealed last month that it is effectively being broken up after confirming talks to offload some of its activities and staff to other asset managers, but stopped short of saying it is being wound down.
The partnership had already moved to halt withdrawals from two of its funds and closed another amid the investor exodus.
OAM said on Tuesday that it will lift the suspension of one of its funds, the Brook Developed Markets Fund, on Friday.
